Withholding error costs Hilliard City Council members

KEVIN CORVO THISWEEKNEWS.COM @ThisWeekCorvo

Tuesday

May 22, 2018 at 12:01 AMMay 23, 2018 at 10:39 AM

Some current and former members of Hilliard City Council will be required to reimburse the city at least $1,000 for health-insurance premiums that were not withheld from their compensation, according to city officials.

David Delande, Hilliard’s finance director, said an audit revealed proper deductions were not made for three council members in 2017.

It wasn’t their mistake.

Four council members opted to enroll for insurance benefits in 2017, he said, but proper deductions were made only for one.

ThisWeek independently confirmed that council members Tom Baker and Les Carrier and former members Joe Erb and Bill Uttley were the four. Delande said Erb was the one for whom proper deductions were made.

The city did not withhold a one-time $1,000 deduction from the three, Delande said; however, deductions from monthly paychecks were made for all four council members last year.

City leaders are conducting an internal audit to determine if any withholdings were missed in 2016 or previous years, he said.

The audit will go back to 2005, the earliest year that insurance benefits were available to council members, he said.

The audit will find which council members elected insurance and if all deductions were made, and the city will seek reimbursement from individuals in instances if those deductions were not made, Delande said.

“We will negotiate with them on how to (reimburse the city, which could include payment plans),” he said.

Council Vice President Kelly McGivern criticized the error. If the mistake is found to be a multiyear problem, she said, she would question why it was not discovered sooner and why external auditing companies are not being held accountable.

“I won’t be silent about it any longer,” McGivern said.

She said although the state auditor’s office requires external audits for municipalities, no performance accountability seems to be included.

“Once again they have failed the city of Hilliard. ... We spend (money) on audits than mean nothing,” McGivern said.

Delande said audits are based on random samples.

“Not every single receipt and transaction is looked at,” he said.

In 2017, Wilson, Shannon & Snow of Newark performed the city’s external audit for the first time, Delande said.

For 10 years prior to 2017, the city used Clark Schaefer Hackett of Columbus, he said.

Ohio Revised Code prohibits municipalities from using the same external auditor for more than 10 consecutive years without an exemption, Delande said.

Carrier, who elected to receive insurance during his first term from 2014 to 2017, when council’s annual salary was $7,500, said he is concerned the misstep is another example of a systemic lack of adequate financial controls in Hilliard.

He also referred to the reported theft of more than $540,000 from the city’s two pool facilities, dating back to 2013. Heather Ernst, the former deputy director of the Hilliard Recreation and Parks Department was indicted March 1 on eight felony counts, including theft in office; one week later Mayor Don Schonhardt fired department director Steve Mazer.

Carrier said May 7 he is waiting to learn the final results of the audit into the missing pools money.

Baker said May 9 he has not been asked for reimbursement but has no problem paying the city back.

“(But) I do have concerns over the financial audits not catching this earlier,” Baker said.

It also appears the city administration is “not always using prudent procedures and financial tools,” he said.

“Combined with the pool theft, this is a concern,” Baker said.

Uttley said he already has reimbursed the city $1,000 for the withholding missed last year.

“None of us knew it,” he said. “Someone made a mistake. It’s an inconvenience and irritating to say the least but it is what it is.”

The city needs a policy to ensure the mistake does not happen again, Uttley said, and it does “shake confidence” in the city’s auditing practices if the problem dates back many years.

Concerning insurance withholding this year, Delande said, all proper deductions are being made for council members who elected to receive insurance coverage.

Council members’ annual salary increased to $13,641 this year, he said.

The vice president earns an additional $1,000 and the president an additional $1,500.

The city budgets about $30,000 a year for insurance premiums for council members, about 90 percent of the total cost, Delande said.

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